"We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft," said AOL CEO Tim Armstrong in the release. "The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value."

AOL shares have rallied on the news -- at the time of this writing, stock is up 31% to $24.13 per share.

AOL management intends to return a large chunk of the sale to shareholders and will figure out the most effective way to do so once the transaction is final.